THE 5-JAR PRINCIPLE: AN EDUCATION IN PURPOSE-DRIVEN MONEY

Train up a child in the way he should go, and when he is old he will not depart from it. - Proverbs 22:6 (KJV)

I first heard about the 5-jar principle of wealth management in 2016 from the passionate and intelligent Danstan Kisuule, the CEO of Y-Save, a savings and investment scheme owned by some Watoto Church members.

The 5-jar principle is one of those wealth management techniques that Jewish parents use to teach their children financial management. For instance, if your monthly income is $1000, the 5-jar technique would be apportioned this way:

The first jar is a tithe jar, where 10%, at a minimum, is set aside as tithe from all earnings. $100 would therefore be set aside and returned as tithe.

The second jar is for alms and offertory to help the less fortunate in one’s community. You would thus set aside $100 to cater to the needs of others.

The third jar is for savings for emergencies and rainy days. As a Jewish child, you are asked to put away 10% of the money you receive. In this instance, $100 would be dedicated and put away for this.

The fourth jar is for investments to create passive income or that generate more income. In this case, $200.

Lastly, when everything is apportioned, the remaining 50% is put in the fifth and last jar to address all expenses.

You can try this out. Distribute your monthly or weekly or daily earnings depending on how the income trickles in, and based on this principle, it is my hope that this will go a long way in determining how you manage your wealth.

From this principle it is easier to distribute one’s earnings so that one doesn’t have to wipe out their net worth dealing with expenses, consequently reinforcing their financial status.

On average, my expenses are 28% of my net earnings, not including one-off payments such as school fees. This means that I am able to free up more money for savings and investments, critical for a financial breakthrough.

In a typical month, my expenses look like this:

Number	Item Description	Percentage (%)
1	Rent	6.0%
2	Home	11.0%
3	Fuel	3.3%
4	Personal Food	3.3%
5	Clothes & Shoes	2.2%
6	Others	2.2%
	Total	28.0%

Typically, every money designated for home expenses is physically debited to my wife and she administers the expenses. Sometimes, in unexpected scenarios, options such as mobile money come in handy in the debit.